The investment boom of the late 1990s brought the UT Foundation returns higher than 20 percent over four consecutive years. Just one decade later, as investors everywhere deal with major losses, the Foundation faces its own challenges.
UT Foundation investments realized a 15.5-percent decline for the nine months ending Sept. 30, 2008, faring just slightly better than the index of 15.7 percent.
A bottom-dwelling market has already impacted about half of the Foundation’s approximately 1,000 endowed funds. The result is a decrease in available scholarship and program dollars, as well as unrestricted funding for UT’s needs and opportunities.
Foundation policies limit spending to 4.9 percent of the endowment’s three-year average market value, which helped preserve endowment in recent years. With current losses, however, many endowments may not be used for their intended purposes at all, due to the Uniform Management of Institutional Funds Act (UMIFA), a law governing spending from endowments that have dropped below their historic gift value. The Foundation is currently informing these donors of the situation, and providing options.
Meanwhile, the Foundation’s board of trustees and investment committee continue to closely monitor asset allocation and policies, including a planned reduction in the 2010 spending policy, according to investment committee chair Nick Conrad.
"We need to keep in mind that markets will fluctuate, sometimes significantly, and really cannot be timed," said Mr. Conrad. "The Foundation needs to maintain a long-term focus because our endowment, unlike an individual’s personal investments, has the advantage of having a perpetual life."
"The UT Foundation’s portfolio has performed consistently well among our peers," he added. "Long-term growth outweighs short-term fluctuations. Even amidst the current challenging economic conditions, we’re poised to benefit the UT community into perpetuity."
For more details about Foundation investments and UMIFA’s effect on endowments, contact Foundation President Brenda Lee at brenda.lee@utoledo.edu or 419-530-7730.